The Palestinian Authority (PA) has suspended plans to force over 6,000 of its employees in Gaza into early retirement, its leader Rami Hamdallah said on Saturday, according to AFP.
The move was announced last month and seen as the latest attempt to squeeze the Hamas terrorist group, which rules Gaza.
Many of the workers are in the health and education ministries, and aid officials are very concerned about the implications for the two million inhabitants of the coastal territory.
"We decided, in consultation with [PA chairman] Mahmoud Abbas, to allow education and health employees who were recently (asked) to retire early to continue their work in the ministry," said a statement from Hamdallah on the official PA news agency Wafa.
It did not say whether all 6,150 employees would now be kept on, but said the decision had been taken to"ensure the provision of services to citizens in the strip".
Hamas and Abbas's Fatah movement have been at odds since 2007, when Hamas violently took control of Gaza in a bloody coup.
A unity government between Hamas and Fatah collapsed in 2015 when Abbas decided to dissolve it amid a deepening rift between the sides.
In recent months, Fatah has finally acknowledged that it has no control over Gaza and is now trying to force it to return control of the enclave by creating economic pressure on the group.
These measures include the cutting electricity supplies to Gaza through Israel and the halting of salary payments to more than 30 lawmakers affiliated with Hamas.
Abbas recently pledged to keep cutting support payments for Hamas until it hands over control of Gaza.